RECOVERY IN UNITED STATES

New Zealand Herald, Volume LXXV, Issue 23075, 28 June 1938, Page 8

RECOVERY IN UNITED STATES

Not long ago the most optimistic prophets in the United States refused to forecast any considerable business recovery before the autumn at the earliest. It is barely summer now, and values on the stock exchanges have taken an upward turn that has astonished London into wondering whether the signs are too good to be trusted. However, New York seems to be confident that the end of business recession is really at hand. It was suggested a little over a month ago that the increased spending programme to which the Federal Government was committed was bound to have some stimulating force. Whatever the origin of the present movement, it will be watched eagerly, and its continuance will be welcomed the world over. The recession in the United States has cast a shadow for. months past over economic conditions everywhere. European rearmament programmes were not thought sufficient to neutralise its effects indefinitely. A feature of the trend in trade during the past year has been a very sharp drop in imports into the United States, with exports keeping up their levels much more successfully. In part this was the result of an abundant harvest, which reduced dependence on external markets for essential foodstuffs. A much more important factor, however, was a marked shrinkage in the imports of raw materials. As an instance, in the first quarter of the present year, foreign purchases of such commodities as rubber, silk, tin, wool and hides were valued at about 80,000,000 dollars, compared with 170,000,000 dollars in the corresponding period in 1937. On the basis of such figures it can be assumed that stocks of these raw materials are low. Increased industrial activity should, therefore, mean an immediate demand for such commodities, with a resultant effect on trade and prices that should benefit all producing countries.